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Four pillars of PayPal's 'big bang' Agile transformation

PayPal's technology VP Kirsten Wolberg gives SearchCIO the facts, figures and philosophy behind a 'big bang' move to Agile that changed the way 510 cross-functional teams work. Included in the budget: $2 million to change out the furniture.

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For Kirsten Wolberg, vice president of technology business operations at PayPal, the Agile delivery methodology -- with its emphasis on rapid prototyping, continuous improvement and tangible products -- is just how software gets made, period. Prior to joining PayPal in 2012, Wolberg was CIO at Salesforce.com where she spearheaded the cloud computing company's move from the sequential Waterfall model to Agile. The new way of working helped pave a 340% increase in revenue to $2.2 billion from $500 million during her three-year tenure there.

Wolberg, who majored in finance at the University of Southern California and earned an MBA from the Kellogg Graduate School of Management at Northwestern, is also schooled in business transformation. Before Salesforce, she was a divisional CIO at Charles Schwab, where the order of the day was rightsizing an organization that was built for the dot-com boom and urgently needed to cut costs to survive the dot-com bust.

So when the opportunity arose to help drive a workplace transformation at PayPal based in part on a companywide move to Agile development, Wolberg jumped at the chance. In this CIO Innovator Q&A, Wolberg explains to SearchCIO's executive editor, Linda Tucci, the four pillars of PayPal's Agile transformation. Wolberg also outlines the logistics of getting 4,000 people to change the way they do their jobs.

How did you get started on the Agile transformation at PayPal?

Kirsten Wolberg Kirsten Wolberg

Kristen Wolberg: One of the first things I did was spend a lot of time talking to developers and managers and leaders on the product, and engineering to understand the pain points within the organization. One of themes was that it was just really hard to get work done within the PayPal technology organization. There were a lot of root causes for that, but this was an organization definitely poised for large-scale change. So we took a step back, bringing all the input from the engineering community, the management community, the product managers and even from some customers, to understand what the scope [was] of what we needed to address.

We crafted the PayPal transformation, which has four pillars. The first was around customer-driven innovation or CDI. This brings into the development process that key connection with the customer: So, asking the customer what is the problem that we are trying to solve and injecting continuous customer input and customer feedback into the development process.

When you say "customer," are you referring to IT's internal business customers, or to PayPal's external customers?

Wolberg: I'm referring to PayPal's external customers. The product organization, as well as the technology organization, was trained in methodologies around customer-driven innovation and started to bring that into their development, really for the first time.

Customer-driven innovation is the first pillar….

Wolberg: So, the second pillar is developing a product model. Historically, PayPal has been sort of project-driven, meaning they put projects together and that project launched a product and then they moved on to the next project.

We broke that paradigm and introduced a product-line discipline. We identified 17 independent product lines and then 35 sub-product lines underneath those 17 product lines. We now have a structure where leadership and teams are aligned under those product and sub-product lines. So if you are an engineer, you will persist as a member of a team that is working on a given product line. That way we make sure to really develop the accountability, the ownership and the pride of craftsmanship around building a product and building exceptional customer experiences.

'Big bang' Agile transformation across 510 teams

That's two big changes.

Wolberg: The third pillar was the Agile delivery methodology. Within PayPal when I got here we had probably 20% to 25% of teams working in some form of Agile. But the rest of the organization was a Waterfall delivery methodology. Given how quickly we wanted to move and given how responsive we needed to be as we were now getting customer input and feedback, the Waterfall methodology was breaking down. It was also breaking down because those teams that were working in Agile were relying on other teams that were working in Waterfall and the handoffs and handshakes just weren't happening in a way that was giving us the ability to have high levels of productivity. It was really frustrating for the engineers.

So, we brought in the Agile delivery model and we are now using Agile across 510 teams and in all of our locations. We had essentially a big bang, where we went from about 20% Agile to 100% of our teams being able to work within Agile.

Wow.

I've had a lot of experience within Agile and this is the largest change at this scale than I have had an opportunity to see -- and I think it is one of the largest that has ever been successfully completed.

How long did it take?

Wolberg: It took us about seven months to do all of the planning and the training. We launched in May of last year. And from May of last year through December of last year, we increased in our Agile maturity from 18% to 76%. And we continue to see dramatic increases from a maturity and productivity perspective with the engineers and product teams that we have.

And because we have brought the teams together in a cross-functional way, we now actually have engineers sitting with product managers [and] sitting with user experience designers who are putting together and building the products for our customers, which is something that is entirely new.

We have changed every aspect. We replaced the furniture, so instead of high-walled cubes we now have a very open environment that is similar to any startup environment that you would see. The teams are self-managed, and they are making the decisions that drive the product roadmap. It's a much different way of working and the teams are finding it empowering, and over time we're seeing it is a lot easier to get stuff done.

Go to part two, "How PayPal rallied a 4,000-strong move to Agile," to read about the many ways in which Wolberg and her team facilitated this major transformation, from hiring coaches to changing out the furniture.

This was first published in August 2014

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Essential Guide

Next generation Agile: Guide to continuous development
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